Section 291(1) of the Companies Act 2016 plays an important role in modern company administration in Malaysia. It governs how members of a company can pass resolutions without holding a physical meeting, through what is known as a members’ written resolution.
In essence, section 291(1) allows members of a company to pass an ordinary resolution in writing, provided it is approved by a simple majority—“more than half of such members” who are entitled to vote.
While the wording may appear straightforward, its interpretation becomes important when determining what “more than half” actually means in practice.
What Does “More Than Half” Mean?
One of the most debated aspects of section 291(1) is the meaning of “more than half of such members.”
At first glance, it may suggest a headcount test meaning more than half the number of shareholders must agree.
However, Malaysian courts have clarified that this is not always the correct interpretation. In particular, the High Court in Mohamed Zahid Yon bin Mohamed Fuad v Jason Lo & Others held that the provision must be read together with section 293(1)(a)(i), which links voting rights to shareholding.
As a result, “more than half” is interpreted to mean a majority of voting rights (shareholding), not simply a majority of members.
Practical Implications for Companies
1. Majority shareholders have decisive control
A shareholder with more than 50% of voting rights can typically pass written resolutions without minority approval.
2. Minority shareholders may have limited blocking power
Unless specific shareholder agreements exist, minority shareholders cannot block resolutions supported by majority voting rights.
3. Company constitution still matters
Companies may modify or supplement statutory rules through their constitution, to provide for alternate rules on voting.
Conclusion
Section 291(1) of the Companies Act 2016 provides a convenient mechanism for decision-making in private companies through written resolutions. However, its key takeaway is that “more than half” is generally interpreted as a majority of voting rights, not headcount.
This ensures that control within a company aligns with shareholding structure, reinforcing the fundamental principle that voting power follows equity ownership.
